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Telefonica Takes $585 Million Charge Following Venezuelan Currency Devaluation
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Spain's Telefonica has taken a EUR 438 million (US$585 million) hit to its 2012 financial results following a sharp devaluation of the Venezuelan currency.
The company also took a EUR1 billion write-down on its Venezuelan assets.
The Venezuelan government devalued their currency by 32 percent last week in an expected move to try and shore up the troubled economy.
The new exchange rate of 6.3 bolivars per dollar will be used from 2013 in the translation of the financial information of Venezuelan companies - where Telefonica operates a mobile network.
As part of the decrease, there will also be a reduction on the euro value of the net financial assets denominated in bolivars, for approximately EUR873 million, considering the existing balance as of December 31, 2012.
Telefonica is also constrained from raising prices to offset the currency losses due to price-controls introduced by President Chávez's government to try and curb the current 22% inflation rate.
Tags: [telefonica] [Venezuela]
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